Guild Mortgage posts reverse earnings, leaders see ‘potential’

During a Q3 earnings presentation, the company’s recently-expanded reverse mortgage division prompted a question from an analyst for any leadership perspective

Guild Mortgage, the California-based lender that acquired a reverse mortgage division from Cherry Creek Mortgage earlier this year, reported increased third-quarter profits despite mortgage headwinds like rates and limited inventory.

The company’s third-quarter earnings call presentation with shareholders and analysts did not highlight the reverse mortgage division, outside of a question posed to company CFO Amber Kramer in the closing moments of the call. Still, reverse mortgage details are part of the earnings report.

However, since news of Cherry Creek’s sale took place in mid-March, some of the data from the second quarter may not be entirely attributable to Guild’s ownership.

As of Sept. 30, Guild held roughly $81.5 million in reverse mortgage loans for investment. Its net gain on reverse mortgage loans held for investment and Home Equity Conversion Mortgage (HECM)-backed securities (HMBS)-related borrowings stood at roughly $2.8 million as of Sept. 30. That’s an increase on the $2.3 million on such loans in Q2.

In its in-house retail division, Guild originated nearly $20 million in reverse mortgage loans in the third quarter, a sizable jump from the $7.8 million in Q2. Wholesale reverse origination, however, dropped sharply in Q3 to $8.9 million, down from the $26.6 million originated the previous quarter.

The company’s earnings report did not include unit numbers. Data from Reverse Market Insight (RMI) indicates that when combined, Cherry Creek and Guild endorsed 1,003 HECM loans combined year-to-date as of Oct. 31. That would be enough to overtake the sixth position on the leaderboard of top 10 lenders maintained by RMI for 2023. Cherry Creek currently sits in seventh place on its own.

During the Q3 earnings call in response to a reverse-specific question, Kramer said the company sees unrealized potential for the division.

“Our reverse volume is overall immaterial to our overall volume, and it is in the [key performance indicators] that we’re showing on the release and it’s about $30 million in the quarter of originations,” she said. “So, we think that there’s a lot more potential to roll it out throughout our retail group and are continuing to grow that area.”

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